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Author: 


Dague,  Robert  Addison 


Title: 


A  postal  banking  system 
proposed  to  prevent... 

Place: 

Chicago 

Date: 

[1 899] 


W-S'^CC^'/ 


MASTER   NEGATIVE   # 


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ORIGINAL  MATERIAL  AS  FILMED  -    EXISTING  BIBLIOGRAPHIC  RECORD 


BlISIN 

203 
D13 


Dague,  Eo'nert  Addison,  1841- 

A  postal  banking  system  proposed  to  prevent 
bank  panics;  an  address  dejivered  before  the 
Union  reform  league,  at  Los  Angeles,  Cal.,  Jan- 
uary 22,  1899,  by  ...  R.  A.  Dagnedi,,,  Chicago, 
Charles  H.  Kerr  &  oo,  |1899i 

14  p.   (Unity  library,  no.  93) 


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FILMED  BY  PRESERVATION  RESOURCES.  BETHLEHEM,  PA. 


BIBLIOGRAPHIC  IRREGULARITIES 


MAIN  ENTRY:    Daaue.  Robert  Addison 


A  postal  banking  system  proposed  to 


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A  Postal  Banking  System 

Proposed  to  Prevent 

Bank  Panics 


AN  ADDRESS  DELIVERED  BEFORE  THE 
UNION  REFORM  LEAGUE,  AT  LOS  ANGELES,  CAL^ 

JANUARY  22,  J899,  BY 

Ex-Statc  Senator  R  A.  Dagne        "^  ""^ 

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A  BANKING  SYSTEM  PROPOSED  TO  PRE'' 
VENT  BANK  PANICS, 

lies  and  Gentlemen: 

You  have  no  doubt  often  heard  the  statement  made,  as 
I  have,  that  we  now  have  in  the  United  States  the  best' 
banking  system  that  the  world  has  ever  seen.  It  is  my 
purpose  in  this  address  to  show  the  claim  to  be  an  erron- 
eous one,  or,  if  it  is  the  best  system,  that  it  is  by  no  means 
a  faultless  one  but  can  be  replaced  by  a  much  better.  I 
grant  thai  the  clearing  house  system,  or  rather  the  book- 
keeping part  of  it,  is  probably  the  best  the  world  has  ever 
seen  and  doubtless  it  is  this  that  the  banker  refers  to  when 
he  says  "the  banking  system  has  never  been  excelled,"  but 
I  this  clearing  house  feature  must  by  no  manner  of  means 
be  confounded  with  the  banking  system  proper,  for  any 
organization  of  business  men  could  very  easily  inaugurate 
and  successfully  operate  that  system,  which  is  only  a  good 
[.  plan  for  carrying  out  a  system  of  exchange  between  banks. 

I  assert  in  the  outset  that  a  monetary  and  banking  sys- 
tem that  has  engulfed  seventy-five  millions  of  thrifty  peo-- 
pje  so  deeply  in  debt,  that  there  is  hardly  a  ray  of  hope 
that  they  can  ever  pay  out,  and  that  every  few  years  cul- 
minates in  wide  spread  panics,  causing  hundreds  of  bank 
suspensions  and  the  loss  of  millions  to  depositors  and  gen^ 
eral  demoralization  of  all  business,  cannot  be  a  sound  or 
safe  system. 

Less  than  five  years  ago  600  banks  suspended  and  mil- 
lions of  the  people's  earnings  vanished.  Instead  of  being 
a  safe  and  sound  monetary  system,  I  contend  that  it  is  a 
fatally  defective  and  unsound  one,  and  unless  the  people 
radically  reform  or  entirely  abolish  it.  they  will  in  tie  not 
distant  future,  find  themselves  financially  undone. 

Already  the  debt  of  the  American  people  is  appalling. 

According  to  Mr.  Walker,  a  republican  member  of  Con- 

[-  gress  .from  Massachusetts,  quoted  by  Congressman  Sibley 

3 


802518 


of  Pennsylvania,  in  a  speech  delivered  In  Oongrees  January 
8tli,  1895,  the  people  of  the  United  States,  at  that  time, 
owed  debts,  public  and  private,  to  the  amount  of  thirty-] 
two  billions  of  dollars.  He  estimated  that  they  bore  an] 
average  rate  of  interest  of  six  per  cent  per  annum,  which' 
would  amount  to  ONE  BILLION,  NINE  HUNDRED! 
MIUiIONS  OF  DOLLARS.  Now  from  statistics  care- 
fully compiled  for  1892,  the  value  of  the  entire  corn,! 
wheat  and  oats  crop,  added  to  all  the  gold  and  all  the  ail-f 
ver  taken  out  of  the  mines  of  the  country  amounted  to 
only  $1,340,236,600,  or  the  enormous  sum  of  $579,763,- 
400  less  than  the  amount  required  to  pay  the  annual  in- 
terest on  our  debts.  Do  you  ask  is  the  situation  growing 
better?  No,  but  on  the  contrary,  it  is  rapidly  growing 
worse.  Coming  down  four  years  later,  E.  H.  Fulton,  edi- 
tor of  the  "Age  of  Thought,"  made  another  investigation, 
and  in  a  table  in  which  Ke  names  1,256  forms  of  indebted- 
ness, the  total'  outstanding  debts  of  the  people  are  shown 
to  reach  the  enormous  amount  of  $44,929,927,703.76;  or 
nearly  forty-five  billions  of  dollars.  If  this  colossal  debt 
is  bearing  but  an  average  of  only  five  per  cent,  the  annual 
interest  would  reach  tEe  vast  sum  of  about  two  and  a 
quarter  billions  of  dollars.  If  these  statistics  are  correct, 
and  I  believe  they  are  substantially  so,  because  they  are 
corroborated  by  other  credible  statisticians,  this  country 
is  doomed  to  universal  bankruptcy  and  ruin,  for  no  country 
can  long  prosper  in  which  the  interest  crop  exceeds  all  its 
staple  cereal  and  mineral  crops  to  the  amount  of  more 
than  five  hundred  millions  of  dollars  anmiallv.  Do  you 
ask  me  what  the  banks  have  to  do  with  this  condition  of 
things?  Let  us  examine  their  methods  of  doing  business 
and  see.  It  is  stated  by  the  bankers  themselves  that  they 
have  in  the  United  States  loaned  to  the  people  five  billions 
of  dollars.  Now  the  Treasury  reports  show  that  there  is 
in  the  United  States  in  all  kinds  of  money  a  total  of  but 
about  one  billion,  six  hundred  millions  of  dollars.  The 
banks  are  thus  enabled  to  reap  an  annual  interest  on  three 
billions,  four  hundred  millions  more  money  than  exists  in 
the  whole  United  States.  Now  M  us  see  how  matters 
etand  in  our  own  state  of  California.  This  state  has  a 
population  of  1,350,000.     Counting  $21  per  capita  in  cir- 


lation,  the  amount  claimed  by  the  Treasury  department, 
)nt,  86  a  matter  of  fact,  there  is  not  half  that  amount 

actual  circulation),  it  gives  a  total  of  $28,000,000  in 
bhe  state;  yet  the  statistics  show  the  startling  fact  that 
fhe  California  people  owe  the  banks  a  debt  of  $212,000,- 
>00  on  which  they  are  paying  interest — a  sum  nearly 
jight  times  more  than  all  the  money  in  the  state. 

Let  me  illustrate  how  the  banks  do  this:  John  Smith 
opens  a  bank,  and  people  begin  depositing  their  money. 
After  the  bank  gets  a  few  thousand  dollars  on  deposit  it 
bedns  to  loan.  Farmer  "A"  comes  in,  gives  his  note  at 
say  6  per  cent  interest  and  borrows  $100.  What  does  "A" 
do  with  the  $100?  Why  he  pays  it  out  to  the  merchant, 
to  the  butcher,  to  his  employes,  and  others,  and  most  of 
that  money  soon  goes  back  to  the  bank  in  the  way  of  de- 
posits. Farmer  "B"  comes  in.  borrows  $100  and  gives  his 
note  bearing  6  per  cent  interest,  and  he  to  soon  puts  it  in 
circulation  and  it  in  a  short  time  flows  back  to  the  bank- 
Mr.  '^C*^  and  ^T>,"  and  scores  of  others,  come  in  and  bor- 
row, each  giving  his  note  bearing  interest  and  each  scatter 
the  money  among  the  people,  and  nearly  all  of  it  sooner 
or  later,  finds  its  way  back  to  the  bank  in  the  way  of  de- 
posits. Now  note  the  fact  that  none  of  this  money  the 
banker  is  thus  loaning,  belongs  to  him,  but  does  belong 
to  the  depositors.  Again  note  particularly  that  the  banker 
by  this  "endless  chain''  method  gets  6  per  cent  on  $100 
from  "A,"  6  per  cent  from  "B,"  and  6  per  cent  from  all 
subsequent  borrowers  on  practically  the  same  money.  Most 
of  the  same  identical  dollars  that  the  banker  loaned  to 
"A'^'  he  later  on  loaned  to  «B,"  and  "C."  and  to  'T),"  and 
'TE*'  so  that  if  he  loans  the  money  eight  times  during  the 
year  (as  the  records  show  he  does)  he  reaps  a  crop  of  6 
times  8.  or  48  per  cent  of  interest  on  the  total  amount  of 
money  in  circulation,  and  none  of  it  belonging  to  him  but 
to*  the  depositors .  to  the  larger  number  of  whom  he  pays 
nothing  for  the  use  of  their  money  and  but  a  small  inter- 
est to  a  few  who  hold  certificates  of  deposit. 

Thus  it  may  be  easily  seen  that  banking  is  not  the  least 
profitable  business  that  honest  men  may  pursue,  and  why 
the  banker  says  we  have  in  this  country,  "the  best  banking 
system  in  the  world."    Moreover,  it  may  also  be  readily 


perceived  just  how  the  banks  have  succeeded  in  getting, 
the  peopl'e  of  this  country  in  debt  to  them  to  the  amount  o1 
three  billions,  four  hundred  millions  more  than  the  total 
amount  of  all  the  money  in  existence  in  the  Kepublie— j 
and  all  this  too,  without  giving  any  adequate  security  U 
the  depositors  against  loss,  for  let  a  panic  come,  and  the 
banks  close  their  doors,  and  how  could  they  do  otherwisel 
for  it  would  be  an  utter  impossibility  to  collect  six  to  eight! 
times  more  money  than  exists  in  the  whole  country  with 
which  to  pay  their  depositors.  The  whole  system  is  un- 
safe to  the  depositor,  menaces,  the  business  stability  of  a 
nation,  and  is  profitable  to  the  banker  himself  only  for  a 
season.  It  is  a  dangerously  inflated  bubble  liable  to  ex- 
flode  in  a  day  and  spread  desolation  throughout  the  land. 
Well  may  the  banker  say  that  the"  present  banking  system 
rests  on  '^confidence.'' 

I  make  no  war  upon  bankers  as  individuals.  They  are 
as  honest  as  the  average  citizen.  It  is  the  radically  de- 
fective system  that  is  to  blame  and  not  the  banker  person- 
ally. It  is  this  system  I  attack,  and  would  replace  with  a 
better  one.  You  ask  me,  is  there  a  better  banking  system 
than  this?  My  answer  is,  yes,  an  infinitely  superior  and 
safer  one.  It  is  a  system  of  Government  Savings  Bank 
and  of  County  Loan  and  Savings  Bureaus.  All  the  leading 
nations  of  the  world  have  government  savings  banks  in 
Buccessful  operation  except  Switzerhnd,  Spain,  China,  the 
United  States  and  Germany;  and  we  ought  to  except 
Germany  from  the  list,  for  while  she  has  no  national 
banks,  she  does  have  a  successful  municipal  banking  sys- 
tem behind  whose  credit  stands  the  incorporated  cities  and 
counties  and  these  are  essentially  government  banks.  Thus 
we  have  only  Switzerland,  Spain,  China,  and  the  United 
States  without  government  banks.  Those  having  govern- 
ment banks  are  twenty-eight  in  number.  I  could  name  all' 
of  them  with  the  amount  of  money  on  deposit  in  1897, 
but  for  the  sake  of-  brevity  will  herein  give  a  few  of  the 
leading  countries: 

Austria,  $49,397,000;  Belgium,  $63,693,274;  Canada, 
$28,932,929;  Ceylon,  $2,035,857;  Cape  of  Good  Hope, 
$5,741,528;  France,  $151,691,705;  Finland,  $9,445,057; 
Great  Britain,  $489,344,870;  Holland,  $18,557,250;  Hun- 


gary, $9,063,206j  Italy,  $89,722,464;  India,  $24,321  ;023; 
Tapan,  $15,223,122;  New  South  Wales,  $20,058,500;  New 
IZeal-and,  $18,957,893;  Queensland,  $11,127,924;  Russia, 
fe286,945,677;  Sweden,  $10,696,725;  Victoria,  $15,  223,- 
Jl22.  The  gran^  total  of  those  given  above  and  those  not 
[enumerated  amounts  to  the  sum  of  $1,344,473,613.00. 

Why  is  it  that  the  United  States  has  never  adopted 
Postal  Savings  banks,  which  is  a  sure  protection  to  the 
depositors  and  advantageous  to  the  government?  Every 
postmaster  general  from  Cresswell  to  Carey  ha^  urged 
Congress  to  do  it,  and  has  submitted  to  that  body  most 
convincing  testimony  from  postal  officials  of  foreign  gov- 
ernments, all  going  to  show  the  great  advantage  the  sys- 
tem has  over  our  system.  I  can  assign  but  one  reason  why,' 
and  that  is  that  the  people  continue  sending  bankers,  or 
representatives  whom  bankers  control,  to  Congress,  whose 
interest  it  is  to  maintain  our  present  system  which  enabl'es 
them  to  draw  interest  from  the  people  on  six  to  eight  times 
more  money  than  exists  in  the  whole  Union.  The  cost 
to  the  government  of  maintaining  Postal  Savings  banks 
would  be  very  moderate.  In  Great  Britain  the  expense  of 
management  is  about  three-sevenths  of  one  per  cent  on 
balances  standing  to  the  credit  of  depositors:  In  France 
the  figures  are  seven-fifteenths  of  one  per  cent:  For  the 
Netherlands  about  the  same:  In  Belgium  the  cost  of 
management  is  only  one-fifth  of  one  per  cent:  In  Sweden 
one-fourth  of  one  per  cent:  Austria  is  the  only  country 
having  the  Postal  Savings  banks  in  operation  where  the 
cost  of  management  exceeds  one-half  of  one  per  cent.  In 
that  country  it  is  el'even-twentieths  of  one  per  cefit.  This 
higher  cost  in  Austria  is  explained  by  the  fact  that  the 
masses  of  the  people  are  poor  and  the  number  of  deposits 
are  in  small  amounts.  This  occasions  more  work  in  keep- 
ing the  books  and  increases  the  expenses  somewhat. 

In  Italy  where  the  people  are  poor  and  deposits  are  in 
small  sums,  the  cost  of  management  is  a  trifle  less  than 
one-half  of  one  per  cent. 

Again,  I  ask  why,  in  the  face  of  the  fact  that  nearly 
the  whole  civilized  world  have  this  inexpensivo  and  abso- 
lutely safe  banking  system  in  successfid  operation,  why 
cannot  the  people  of  this  country  adopt  it?    Can  there  be 


8 

but  one  answer?  The  money  loAners  who  live  by  annual]] 
reaping  an  interest  harvest  of  about  two  and  a  half  biUioi 
of  dollars,  or  more  than  all  the  staple  crops  raised,  and  a 
that  our  mines  produce,  do  not  want  a  banking  system  in-l 
augurated  here  so  manifestly  in  the  people's  interest  anq 
one  that  would  prevent  them  from  reaping  colossal  fori 
tunes  by  clever  manipulations  of  other  people's  money. 

Is  there  any  hope  that  this  government  will  in  the  nc 
future  establish  government  banks?  I  am  very  sorry  to  sayl 
there  are  but  slight  grounds  for  such  hope.  Wall  street  is 
so  powerful,  the  bond  hoMers,  the  great  interest  gatherers 
are  so  thoroughly  organized,  the  great  aggregations  of 
wealth  are  so  greedy,  that  the  scores  of  thousands  of  peti- 
tions that  have  been  sent  up  to  the  capital  praying  for  a 
government  bank,  have  been  cast  in  the  Congressional 
waste  basket  and  the  people's  prayers  go  unheeded. 

Even  now  there  is  the  greatest  danger  that  we  will 
more  firmly  establish  our  present  destructive  and  oppres- 
sive banking  system  than  ever  before  and  put  off  to  the 
distant  future  a  better  system. 

In  keeping  with  the  demands  of  the  banks,  bills  have 
been  introduced  into  Congress  providing  that  our  360  mil- 
lions of  non-interest  bearing  treasury  notes  shall  be  called 
in  and  retired  and  interest  bearing  bonds  be  issued  in  their 
stead,  and  the  banks  be  authorized  to  issue  their  own  notes 
as  money,  and  that  the  people  be  allowed  no  other  kind 
of  paper  currency.  Moreover,  that  the  banks  be  authorized 
to  loan  their  own  notes  to  the  people  at  the  rate  of  ten 
per  cent  per  annum.  Was  a  more  audacious  and  startling 
proposition  ever  made  than  this  one  to  give  a  privileged 
class  the  monopoly  of  issuing  their  own  evidences  of  in- 
debtedness as  money,  and  then  give  them  the  power  to 
compel  the  people  to  borrow  of  them  these  notes  at  a 
ruinous  rate  of  interest? 

Not  only  do  they  demand  this,  but  they  propose  that 
the  government  shall  not,  as  now,  be  security  for  the  re- 
demption of  the  notes,  but  the  security  to  the  people  shall 
be  based  solely  on  the  assets  of  the  banks.  And  all  this 
they  demand  without  proposing  any  adequate  security  to 
the  depositor  for  the  return  of  money  he  has  left  in  their 
keeping. 


If  it  is  the  correct  policy  for  the  government  to  "go  out 
)f  the  banking  business"  and  confer  upon  private  corpor- 
Itions  or  individuals  the  authority  to  create  all  the  paper 
poney  and  do  all'  the  banking,  then  why  should  not  the 
government  also  confer  upon  corporations  or  individuals 
'le  authority  to  control  all  the  postal  business,  conduct  all 
le  schools,  select  all  the  judges  and  sheriffs,  run  all  the 
jourts  and  hire  all  the  police  force  to  protect  your  cities 
'and  thus  follow  the  example  of  Turkey,  a  semi-barbaric 
country. 

A  reference  to  the  United  States  comptroller's  reports 
shows  what  I  have  herein  stated,  that  banks  can  pay  on  an 
average  about  $1  in  $8  of  their  deposits.  That  is,  when 
they  report  $8  on  deposit  they  have  only  $1  in  cash  with 
which  to  pay  the  $8.  And  this  is  considered  "honest 
sound  banking."  If  called  upon  to  pay  their  depositors 
at  once  they  could  only  pay  about  11  cents  on  the  dollar. 
The  "Farmer's  Sentinel"  recently  said:  "Just  when  de- 
positors will  get  frightened  and  want  their  money  is  as  un- 
certain as  the  coming  of  the  next  blizzard  or  the  next 
earthquake.  Of  course  there  are  "assets"  to  make  good 
the  deficiency  in  cash,  but  every  body  knows  what  "as- 
sets" amount  to  in  the  time  of  panic.  Of  course  the  more 
this  bubble  of  bank  credits  is  inflated  the  sooner  it  is  liable 
to  break.  But  until  the  collapse  comes,  the  bankers  are 
reaping  a  rich  harvest  of  interest  on  what  they  owe  their 
depositors.  The  next  panic  is  looked  upon  by  good  busi- 
ness men  with  apprehension  and  anxiety  as  the  next  earth- 
quake by  the  inhabitants  of  tropical  regions.  The  only  time 
wl^en  men  are  absolutely  free  from  this  fear  of  a  panic  is 
immediately  after  one  has  occurred,  because  they  feel'  that 
another  one  will  not  occur  at  once  for  they  know  the  com- 
mercial world  is  then  at  the  bottom  of  the  hill  and  cannot 
go  lower.  But  as  the  years  go  by,  they  begin  to  tremble,, 
for  they  know  the  history  of  the  past,  and  that  our  unsound 
land  unsafe  banking  system  results  in  disastrous  panics 
about  every  seven  or  eight  years." 

Again  I  ask,  why  should  not  this  intelligent,  progres- 
sive nation  adopt  a  better  banking  system?  As  I  have  shown 
government  banks  are  not  new,  something  that  has  never 
been  tried.     Great  Britain  established  Postoffice  Savings 


10 

banks  in  1861.  Gladstone  championed  them,  ajid  score 
of  the  advanced  thinkers  of  Europe  have  expressed  surpris 
that  America  haa  not  long  ago  followed  suit.  Our  ptesei 
system  is  piling  up  an  interest  debt  we  can  never  pa] 
Our  people  are  suffering  onerous  burdens  because  of  thi 
colossal  debt.  Our  industrial  cl-a^es  and*  working  peopL 
are  growing  poorer  every  day.  Our  money  loaners  arl 
heaping  up  immense  private  fortunes  out  of  all  proportioi 
to  the  value  of  services  they  render;  depositors  are  not  se- 
cured against  loss;  frequent  panics  and  bank  suspensions 
«weep  over  the  country  ruining  millions;  the  heaviest  bur- 
dens of  this  defective  system  bear  the  heavier  upon  the 
poor  classes  who  are  l-east  able  to  bear  it;  our  politics  are 
corrupted  in  many  ways  by  the  use  of  money  which  seeks 
to  and  does  effect  legislation,  and  the  perpetuity  of  our 
republican  institutions  themselves  are  threatened  by  out- 
breaks and  riots  on  the  part  of  the  discouraged  unem- 
ployed, whose  numbers  are  greatly  augmented  by  the  busi- 
ness panics  and  depressions  caused  by  periodical  bai^ 
failures. 

The  adoption  of  government  banks,  especially  if  sup- 
plemented by  State  and  County  Loan  Bureaus,  would 
cure  all  these  ills.  There  is  but  one  important  feature 
lacking  to  make  the  Government  Postal  banks  a  model  sys- 
tem of  banking,  filling  all'  the  essential  requirements  of 
commercial  banking.  That  lack  consists  in  the  fact  that 
Postal  Savings  banks  cannot  easily  be  made  banks  through 
which  small  loans  couM  be  negotiated;  for,  while  they  re- 
ceive money  placed  on  deposit  and  loan  in  large  amounts 
by  investment  in  government,  state  and  municipal  bonds, 
they  could  not  make  small  Mns  to  numerous  individuals 
without  a  large  increase  of  employes  and  expense.  To  meet 
this  requirement  and  to  bring  government  banks  and  the 
people  closer  together,  so  that  not  only  small  deposits 
might  be  made  but  small  sums  could  be  borrowed  from  the 
banks,  I  propose  the  creation  of  County  Savings  Banks 
and  Loan  Bureaus. 

If  Postal  banks  were  established  without  the  County 
ban(ks  it  would  be  a  grand  improvement  over  our  present 
system.  If  County  banks  were  created  without  the  govern- 
ment Postal  banks  it  would  be  a  mighty  change  for  the 


11 


jtter,  but  if  both  were  established,  we  would  have  as  per- 
fect and  as  safe  a  banking  system  as  could  be  created  under 
)ur  present  form  of  government,  and  would  meet  every  re- 
[uirement  of  seventy-five  millions  of  people  till  that  better 
je  is  ushered  in,  when  the  nation  will  be  one  grand  co- 
jperative  commonwealth,  in  which  there  will  be  no  bor- 
rowing of  money,  no  interest  paid,  when  money,  if  it  is 
itill  called  money,  shall  not  be  a  commodity  to  be  bought 
and  sold  and  to  bear  interest,  but  will  be  only  a  medium 
of  exchange  or  a  memorandum  of  transactions  completed  or 
of  labor  performed.  ~ 

I  have  drafted  a  bill  for  a  proposed  state  law  providing 
for  the  creation  of  such  County  Savings  Bank  and  Loan 
Bureaus,  which,  owing  to  its  great  length  of  detail  I  can- 
not, in  this  address,  give  in  full.  It  possesses  many  of  the 
features  of  the  German  system  alluded  to.  I  will  briefly 
st^ate  its  general  provisions: 

Let  every  County  Treasurer  be  authorized  by  state 
rlaw  enacted,  to  receive  money  on  deposit,  pl-acing  it,  as  do 
[our  present  savings  banks,  in  one  of  two  funds  at  the  op- 
Hion  of  the  depositor:  A  "Demand  Fund"  or  a  "Term 
Ihmd."  Money  placed  in  the  Demand  Fund  to  bear  no 
interest  and  to  be  at  all  times  subject  to  withdrawal  by  the 
depositor.  For  money  deposited  in  the  Term  Fund  for 
not  less  than  three  and  more  than  twelve  months,  the 
treasurer  shall  issue  to  the  depositor  negotiable  certificates 
bearing  two  per  cent  per  annum  payable  at  maturity  of 
certificate,  these  certificates  to  be  issued  in  denominations 
of  $5,  $10,  and  $20.  Now  let  the  treasurer  be  authorized 
to  make  loans  at  say  three  per  cent  per  annum  to  cover  ex- 
tra expense  of  conducting  the  business.  No  loans  to  run 
longer  than  two  years,  taking  a  first  mortgage  on  real  es- 
tate worth  double  the  amount  loaned,  in  the  name  of  the 
County,  as  security,  the  borrower  furnishing  an  abstrct 
of  title  to  the  satisfaction  of  the  County  Attorney  and 
Board  of  Supervisors,  and  paying  all  expenses  of  making 
the  loan  if  the  loan  is  consummated.  The  Board  of 
County  Supervisors,  through  three  of  their  number,  can 
act  as  appraisers  of  property  given  as  security,  said  Board 
having  the  general  management  under  the  state  law,  of  the 
entire  business.    The  bonds  of  each  officer  charged  wih  the 


12 


discharge  of  important  duties  in  connection  with  thi 
County  Bank  and  Loan  Bureau,  to  be  enlarged  so  as  t< 
insure  ample  protection  to  county  and  depositor. 

All  foreclosures  shall  be  in  the  name  of  the  County  anc 
aU  the  profits  accruing  from  the  banking  system  ehall  gt 
into  the  County  Treasury.    It  shall  be  the  duty  of  the  At] 
torney  General  of  the  state  to  prepare  all  forms  of  certil 
ficates  of  deposit,  books,  notes,  bonds,  mortgages  and  otheu, 
instruments  and  forms  required  to  put  this  system  into 
operation  in  all  the  counties  of  the  state  alike.     All*  the 
penalties  now  prescribed  by  law  for  the  punishment  of 
county  and  district  officials  for  unlawful  acts  are  provided 
as  penalties  for  the  violation  of  this  act.     In  large  cities 
branches  of  this  County  bank  can  be  established  in  several 
places  for  the  convenience  of  the  people.    The  advantages 
of  the  creation  of  this  proposed  County  Bank  and  Loan 
Bureau  would  be  inestimable.    It  would  be  absolutely  safe 
to  depositors;  It  wouM  forever  abolish  bank     panics;     It 
would  bring  out  millions  of  money  now  in  hiding  and  puti 
it  in  circulation;  It  would  abolish  high  interest  on  money,] 
•  forcing  the  rate  down  to  near  the  amount  barely  sufficient' 
to  pay  the  expense  of  conducting  the  business  (the  per  cent 
not  to  be  called  interest  but  "Expense  Fund'') .     It  would 
inflate  the  currency  by  an  inflation  that  couM  do  no  harm, 
for  it  would  be  self-adjusting.     The  certificates  issued  in 
small  denominations,  would  freely  circulate    among    the 
people  as  money  and  would  be  safer  and  sounder  money 
than  bank  bill's  issued  by  private  corporations  who  are 
under  no  bonds  for  the  honest  transaction  of  their  busi- 
ness.   It  would  stimulate  industry.    Money  would  seek  in- 
vestment, not  in  note  shaving  and  iron  clad  mortgages, 
but  in  trade,  in  manufacturing  and  numerous  other  chan- 
nels.   It  would  take  away  from  money  sharks  the  power  to 
fleece  their  fellow  men  by  contracting  the  volume  of  the 
circulating  medium,  and  the  occupation  of     the     usurer 
would  be  gone  forever.    In  case  of  foreclosure  of  mortgage, 
the  land  would  go  to  the  county  and  state  instead  of  to 
individuals  as  under  the  present  system,  being  thus  a  more 
just  and  practicable  method  for  the  reclaiming  of  lands, 
by  the  state,  than  the  single  tax  or  any  other  system  yet 
proposed.     The  present  banks  would  in  due  time  have  to 


i3 

content  with  the  smalier  interest  or  go  out  of  business, 
>r  they  could  not  long  get  a  higher  rate  of  interest  than 
lat  charged'  by  the  public  banks,  and  yet  this  proposed 
^stem  would  not  necessarily  destroy  private  banks.    They 
)uld  continue  to  sell  exchange  and.  make  loans  on  per- 
)nal  security  or  on  short  time,  and  transact  other  com- 
mercial business;  but  having  no  monopoly  of  the  banking 
usiness  (as  they  have  now)  they  could  not  create  conditions 
>f  panic  by  heaping  upon  the  people  an  indebtedness  eight 
[times  greater  than  the  total  amount  of  money  there  is  in 
I  the  United  States.     They  would  themselves  be  more  se- 
|cure  from  panics  than  they  now  are.  ^  • 

All  the  profits  of  this  County  Banking  system,  if  there 
any  profits,  would  not  go  to  swell  the  princely  fortunes 
of  the  usurer  but  would  be  returned  into  the  country  treas- 
ury and  thus  reduce  the  people's  taxes.  All  the  immeas- 
urable advantages  of  an  honest,  common  sense,  perfectly 
safe,  cooperative  banking  system  would  be  enjoyed  by  the 
people  at  large. 

It  has  been  well  said  that  all  things  used  in  common 
^y  the  public  should  be  owned  and  controlled  by  the  pub- 
lic. Money,  the  medium  of  exchange,  is  probably  more 
important  and  widely  used  than  any  other  thing.  It  is, 
therefore,  one  of  the  most  mischievous  and  fallacious  er- 
jrors  of  the  age,  that  money  should  be  issued,  owned  and 
Icontrolled  by  private  individuals  or  corporations  for  their 
[own  benefit,  instead  of  by  and  for  the  government  which  is 
Icomposed  of  all  the  people  . 

Finally,  this  proposed  Federal  Postal  Savings  bank  and 
I  the  County  Savings  Bank  and  Loan  Bureau  herein  alluded 
to,  would  save  the  country  from  ruin  which  is  inevitable 
'under  our  present  system. 

In  conclusion  let  me  add  that  this  system  which  I  pro- 
jpose  fits  in  with  the  general  system  of  doing  public  busi- 
mes8  now  largely  successful  in  this  and  other  countries 
pnd  which  would  be  increased.  Public  schools,  blind,  in- 
Fsane,  and  deaf  and  dumb  asylums,  orphans  homes,  public 
l^hospitals,  all  reformatory  institutions,  police  and  fire  de- 
"  mrtments,  postoffices  and  our  mail  carrying  system,  county 
)aor  farms,  the  construction  of  public  roads  and  bridges, 
^prisons,  courts,  penitentiaries,  public  libraries  and  many 


14 


oisher  things  of  a  public  nature,  are  cooperative,  nationalis- 
tic  and  socialistic  in  their  nature.    To  these  are  yet  to  hi 
added  banks,  steam  and  street  railways,  municipal  watei 
works,  telegraphs,  tetephones,  electric  lights,  water  trans 
portation,  fuel,  land,  mines  and  all  other  things  of  gener-i 
public  utility,  because  these  are  used  by  all  the  people,  ai 
their  monopolization  by  private  parties  for  individual  ^\ 
must  and  does  infringe  upon  the  rights  of  the  masses.  lli€^ 
true  solution  of  our  industrial  problems  will  be  found  after 
we  have  established  'TMrect  Legislation,"  and  estabhshed 
the  principle  and  inaugurated  the  practice  of  government 
end  municipal  ownership  of  all  those  things  of  great  public 
utility,  while  at  the  same  time  guaranteeing  to  the  in<livi(i-, 
ual  the  exercise  of  his  personal  rights  and  liberty  to  per- 
sonal ownership  of  those  products  of  his  own  labor  or  in- 
dustry, the  use  of  which  does  not  infringe  on  the  rights  ot 
his  fellow  man.     In  the  list  of  personal  rights  might  be 
enumerated  his  personal'  apparel;  his  home  and  contents; 
his  bicycle,  or  horse,  or  carriage,  or  yacht,  or  anything  else 
the  product  of  his  own  labor  or  industry,  not  inconsistent 
or  opposed  to  the  public  good.    T^nd  is  a  free  gift  of  the 
supreme  author  of  us  all,  and  the  individual  s  nght  to  it. 
should  be  limited  to  his  occupancy  and  use,  aud  the  hoMmgl 
of  it  unoccupied  and  unused  for  speculative  purposes  irom\ 
occupancy  and  use  by  others,  while  millions  are  houseless 
and  homeless  is  detrimental  to  the  pubMc  and  should  not 

be  permitted.  .       ,,  i  jr 

The  financial  question  is  profoundly  a  moral  one.  n 
you  impoverish  the  people  you  have  a«  a  result  poverty, 
degradation  and  crime.  The  question  in  the  ultimate  is 
which  shall  rule;  shall  it  be  the  people  for  the  whole 
people,  or  the  favored  few  for  their  own  benefit? 

Let  us  have  government  ownership  of  all  great  public 
utilities  and  have  them  operated  by  the  government  for  all 
the  people  at  cost  of  operation,  and  M  individuals  be  en- 
couraged to  associate  themselves  together  into  cooperative^ 
societies  for  mutual  benefit,  and  let  the  mot^  for  govern- 
mmt  and  individual  be  "one  for  all  and  all  for  one,    ani 
our  civilization  would  qui*ly  advance  to  a  plane  of  prcfrj 
perity  and  happiness  of  the  people,  littie  dreamed  of  by  out^ 
most  optimistic  dreamers. 


END  OF 
TITLE 


